All Forum Posts by: Neil Henderson

I agree with what @Michael Bishop and @Todd Dexheimer are saying here.

1. If you're looking at putting together a deal that's smaller in scale, a syndication is probably not the right vehicle. Too expensive.

2. If you're looking at bringing any investors into a deal, no matter how small, Talk to a securities attorney.

The questions to ask yourself:

Is there an investment of money? Yes

Is there more than one investor? Yes

Are your investors expecting profits? Yes

Are you doing all the work? Yes

If the answer is "Yes", you are selling a security and should talk to a securities attorney.

I know of one, Jillian Sidoti at crowdfundinglawyers.net. Not sure if she is on Bigger Pockets or not.

I'll echo what @Christal Warren said. If you're living overseas, have you considered buying into a multi-family syndication?

As far as market analysis, look for:

- Good unemployment numbers, dropping unemployment rate.

- Increasing population over the past five years.

- Population growth in the demographic you're targeting. Wouldn't do to invest in a property best suited for people aged 55+ if that population is declining.

- Job diversity. If the city you're investing in is heavily dependent on one type of industry (tourism, manufacturing or retail) and the economy turns, you could find quality residents in short supply. See Las Vegas in 2009, the city's economy was heavily dependent on tourism and construction. The double shock of the housing crisis and the Great Recession hit the city harder than most.

- Diverse employer base. Is the locale heavily dependent on one or two employers? What happens if that employer decides to move their operation.

- Vacancy rate. What's the trend on vacancy rate in the community?

- City government health. Is the city investing in infrastructure? It's a good sign things are going well if they are.

I can speak to the Las Vegas short-term rental market. Be careful. The city is becoming more and more hostile to short-term rentals. A mix of grass roots neighborhood uproar over party houses in residential neighborhoods and quiet lobbying from the Las Vegas resort operators.

A good place to start is getting some paid reports from AirDNA.co This will give you an idea of how active and profitable a market is. After that, I strongly suggest doing a great deal of due diligence on the regulatory landscape of the market you're looking at. Many municipalities are becoming hostile to short-term rentals.

@Ali Boone is correct. I'm not sure anywhere in California is a cash flow market, especially for SFR's. Investors in California are banking on the appreciation to make up for the negative cash flow most rentals will put off. I'm not going to get into a debate over investing for cash flow versus appreciation, to each his own.

In my humble opinion, always start with positive cash flow, it allows you to wait out and survive many of the nastier market shifts lurking out there. After 2009, If you had a property that was putting off positive cash flow but the value was underwater, you could've held on until the market recovered. If the property wasn't putting off positive cash flow...well, most of those landlords didn't hold on to those properties.

Many of the coastal markets (California, New York, New Jersey, parts of Florida, etc.) are Cyclical Markets that tend to have larger price fluctuations, periods of boom and bust. Markets in the Midwest and Southeast tend to be linear markets. Less volatile, not a ton of a appreciation, but more likely to have positive cash flow. Slow and steady wins the race.

A lot of Californians choose to deploy their capital in these Linear/Cash Flow markets.

I don't think you can get more passive, in real estate, than being a limited partner on a syndication. Aside from doing your own due diligence on the deal and the sponsor(!!!), there's not much more to it than cashing the checks and filing the K-1's.

I'll echo what many other's have said as well - outside of real estate, Vanguard Index funds. Low fees, totally passive (unless you obsessively rebalance your portfolio) and a great deal of diversification. Most of my portfolio is in real estate now but I still have a good chunk of my retirement account in a Vanguard Index 500 fund.

That said, most of us are Bigger Pockets members because we believe in the long term wealth building power of real estate. Cash flow, appreciation, inflation resistance and tax efficient.

Flood zones and insurance costs are always top of my list when looking at properties in Florida.

I have personally worked with Joe Fairless at Ashcroft Capital. Their focus is on value add apartment communities primarily in the Dallas, TX market. Very straight shooter. I also think very highly of @jeredsturm at SNS Capital but I don’t personally know anyone who has invested with them. Read Jered’s post about the source of capital in syndication deals and you’ll understand why I think so highly of him. @JeremyRoll is also a great source of a wide variety of passive investment opportunities. From real estate, to cell phone towers, to ATM machines, etc.

The Las Vegas short term rental market is in flux. Short term rentals under 30 days are prohibited in Clark County and the City of Henderson. They are allowed in the City of Las Vegas, but you must get a yearly business license for $500 plus a newly implemented Special Event license for an additional $500. The rental unit must not be with 600 feet of an existing short term rental. The rental must display a plaque on the outside that explains that it is a short term rental, the property owner’s name (not the manager) and the property owner’s phone number. There are no restrictions on short term rentals in the City of North Las Vegas, but it’s not the most desirable part of town, for the most part. AirDNA is a great resource for market data. The City of Las Vegas has a website and a phone number for short term rental information. Should be pretty easy to find on Google. I’m on my phone otherwise I would Post the link. Good luck to you. Short term rentals can be a very profitable and rewarding niche. Just realize it is far from passive and the regulatory landscape in many metropolitan areas is shaky.

The simplest explanation is it lower the cost of the sale. Marketing a property costs a agent/Broker money and time. Therefore they expect a commission, which is typically paid for by the seller. Selling off-market can frequently save quite a bit of money in commissions, even when factoring the higher sale price the agent promises. A deeper explanation requires examining the seller’s specific distress and motivation. If a seller is facing eminent foreclosure, or needs to close quickly for some other reason, an on-market sale might not proceed quickly enough for them. The property may require a lot of work to get any curb appeal. The seller might not have the money to make those improvements and on-market deals with curb appeal are what sell to buyers like that. A seller’s motivation to sell might mean they need to close quickly (I.e. job taking them out of the area). Maybe they have a new home under contract in the new location and can’t afford two mortgage payments. Basically, on-market deals typically take longer to sell.

I'll echo what @Spencer Karr says about the small multi-family in Las Vegas. There has been no new small mult-family built in Las Vegas since the 1980's. Most of them are C- to D- class properties in really rough neighborhoods. Maybe you'll get lucky and buy in a gentrifying neighborhood but you'd better have some experience dealing with the types of tenants that come with that class of property.

The large multi-family market in Vegas is booming but you'll be looking at 150+ unit properties and the competition is fierce!